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At the San Francisco offices of Yammer, Microsoft’s Satya Nadella today announced a new instance of its Azure cloud product built for U.S. government customers. The product, formally called “Windows Azure US Government Cloud,” is a separate service, hosted inside the U.S. that will only be managed by U.S. citizens. The announcement follows recent news that Microsoft earned a special form of authorization to sell its products to the government.

Azure for U.S. government customers, in a way, screams with irony, given the current news cycles that discuss the encryption cracking, Internet surveillance, and other secret practices that the United States government is undertaking through its intelligence arms. To flip that and require a separate instance of Azure to protect government data from any form of snooping is somewhat grimly humorous.

Not that any of that is Microsoft’s fault. It just wants to sell its services to whomever needs them, and if it needs to tweak Azure to sell it to the government, then so be it. I’m unsure how deep demand is for cloud computing in the government, an infamously technologically backwards group, but we’ll find out.

Also at the event, Nadella stated that Skype is undergoing a reformation to run more of its processes on top of Azure itself. Perhaps most interestingly, Nadella said that to build a public cloud of the scale of Azure, with a global datacenter footprint, would cost around $5 billion or $6 billion. That’s a high bar to entry. Local clouds could be built for a fraction, of course, but to reach the scale of AWS or Azure, you will need a firm 10-figure budget. And that’s only going to grow in time, as the public cloud grows.

Microsoft also announced that in October it will release HDInsight on Azure, a Hadoop-based service for the Apache operating system. It’s another notch in Microsoft’s nascent, but growing open source support record.

The day’s event was a fusillade of updates and notes from the enterprise and cloud group at Microsoft. Nadella deferred the CEO question, and reiterated that Steve Ballmer remains “very much” the CEO of the company. And he didn’t wink following the remark.